Prev property mgmt company charging to release prorated rent
To be honest with you I thought I had gotten the prorated amount of rent for August when we closed on 8/14/15, but this wasn't the case. Being that this is my first deal I probably should have paid a little bit closer attention. Ever since I told the old property management company that I wouldn't be retaining their services they've become a pain in the butt. I still haven't gotten the security deposits back from them and I just got keys earlier this week. Then their manager sends me this email today.
"I ran into a small problem with printing your check. The two prorated rent checks I have for you total more than $600 ($657.22) – my system won’t print the checks without a W-9 on file then at the end of the year we will send you a 1099. Our fee for processing the 1099 to the owners at the end of the year is $75. I can write you a check for $599, thus eliminating the need for the W-9 and 1099 at the end of the year, or you can fill out a W-9 form and I can write the check to you, less our processing fee."
I wrote her back telling her that her figure seemed off to me. The rents they collected for August were $1415. Divided by 31 that's about $45.65 per day which means I should be receiving about $821 because I owned the property for 18 days in August. I asked her to share her math with me, we'll see what she says.
Now on to the part about my question. Can she really force me to fill out a 1099 for her company and charge me $75? This seems ludicrous to me. This is in Michigan.
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@Arthur E. That's all a load of crap. 1099s can be issued for $15 on the HIGH end.
By the way, they are requesting that you fill out a W9 which will include your SSN or Taxpayer ID. They will then issue you a 1099 at year end to report the rental income that they have transferred to you.
It's funny because you only need to utilize this reporting method when YOU are providing services to THEM. For instance, if you hired a contractor and paid him $2,000, you would request that he fill out a W9 and then issue him a 1099 at year end to show the monies paid to him. This ensures appropriate reporting as far as the IRS is concerned. Since you are not providing the PM company services, and it's actually the other way around, this whole thing is a moot point.
That being said, I know some property management companies have software which requires them to issue 1099s to if they "pay" you more than $600 (even though it's your rent and they are just collecting it). So it could just be a software issue.
Regardless, it costs very little to issue a 1099. That's up there with exploitative fees.
Not legal advice.